Patients with cancer have an impaired T cell response that can decrease the potential therapeutic benefit of cancer vaccines and other forms of immunotherapy. The establishment of a chronic inflammatory environment in patients with cancer plays a critical role in the induction of T cell dysfunction. The accumulation of myeloid-derived suppressor cells (MDSC) in tumor bearing hosts is a hallmark of malignancy-associated inflammation and a major mediator of the induction of T cell suppression in cancer. Recent findings in tumor bearing mice and cancer patients indicate that the increased metabolism of L-Arginine (L-Arg) by MDSC producing Arginase I inhibits T cell lymphocyte responses. Here, we discuss some of the most recent concepts of how MDSC expressing Arginase I may regulate T cell function in cancer and suggest possible therapeutic interventions to overcome this inhibitory effect.